June 1990 A.E. Ext. 90-15 SON NORT Stuart F. Smith Linda D. Putnam Department of Agricultural Economics New York State College of Agriculture and Life Sciences A Statutory College of the State University Cornell University. Ithaca. New York 14853-7801 1989 DAIRY PARK BUSINESS SUMMARY NORTHERN HUDSON REGION Table of Contents INTRODUCTION ........................................................... 1 Program Objective ................................................. 1 Format Features 1 SUMMARY AND ANALYSIS OF THE FARM BUSINESS .... ...... ............ ........ 2 Business Characteristics .......................................... 2 Income Statement .................................................. 2 Profitability Analysis ............................................ 6 Farm and Family Financial Status ............ ................... ... 8 Cash Flow Statement ............................................... 11 Repayment Analysis ................................................ 12 Cropping Analysis ................................................. 14 Dairy Analysis .................................................... 16 Capital and Labor Efficiency Analysis ............................. 18 COMPARATIVE ANALYSIS OF THE FARM BUSINESS .............................. 19 Progress of the Farm Business ..................................... 19 Farm Business Chart................................................ 20 Financial Analysis Chart .......................................... 22 Comparisons by Type of Barn and Herd Size ......................... 23 Herd Size Comparisons ............................................. 23 IDENTI IT AND SET GOALS ................................................. 37 1989 DAIRY FARK BUSINESS SUMMARY NORTHERN HUDSON REGION* INTRODUCTION Dairy farmers throughout New York State have been participating in Cornell Cooperative Extension's farm business summary and analysis program since the early 1950's, Each participating farmer receives a comprehensive business summary and analysis of his or her farm business. The information in this report represents an average of the data submitted from farms in the Northern Hudson region. Program Objective The primary objective of the dairy farm business summary, DFBS, is to help farm managers improve the business and financial management of their farm through appropriate use of historical farm data and the application of modern farm business analysis techniques. In short, DFBS identifies the business and financial information farmers need and demonstrates how it should be used in identifying and evaluating strengths and weaknesses of the farm business. Format Features This regional report follows the same general format as in the 1989 DFBS printout received by all participating dairy farmers. Worksheets are included to give non-DFBS participants an opportunity to summarize their businesses. The analysis tables have an open column or section labeled ~ Farm. It may be used by any dairy farm manager who wants to compare his or her business with the average data of this region. This report features: (1) an income statement including accrual adjustments for farm business expenses and receipts, as well as measures of profitability with and without appreciation, (2) a complete balance sheet with analytical ratios, (3) a cash flow summary including debt repayment ability, (4) a cropping analysis, (5) a daiIY analysis, and (6) capital and labor efficiency analysis. Micro DFBS, a computer program which enables Cooperative Extension agents and specialists to calculate and print individual farm business reports in their offices, is now being used by the dairy farm management field staff for 90 percent of the farms cooperating. This innovative approach provides faster processing of farm record data and increased use of the DFBS in farm management programs. *The Northern Hudson Region of New York State, with the number of participating farms in parentheses, is comprised of Albany (4), Greene (2), Saratoga (3), Schenectady (3), Rensselaer (26), and Washington (24). This report was written by Stuart F. Smith, Senior Extension Associate, Farm Management. Linda Putnam was in charge of data preparation. Cindy Farrell and Beverly Carcell! prepared the publication. Farm business data was collected by Cooperative Extension agents Tom Gallagher, Cathy Wickswat, and John Thurgood. 2 SUMMARY AND ANALYSIS OF THE FARM BUSINESS Business Characteristics Finding the right management strategies is an important part of operat­ ing a successful farm. Various combinations of farm resources, enterprises, business arrangements, and management techniques are used by the dairy farmers in this region. The following table shows important farm business characteristics and the number of farmers reporting these characteristics. BUSINESS CHARACTERISTICS 62 Northern Hudson Region Dairy Farms, 1989 Tne of [Si:rm Dairy Part-time dairy Dairy cash-crop Part-time cash-crop dairy Numbe:t: 61 0 1 Tne of Owner shi J2 Owner Renter Number 56 6 I,iJ2e of Business Single proprietorship Partnership Corporation N1!:mbe :t: 41 16 5 Busines§ Record s,ist~m ELFAC Account Book Agrifax (mail-in only) On-Farm Computer Other Num:ber 6 12 a 17 11 16 Ine S2f .!;}Si:rn Stanchion/Tie-Stall Freesta11 Combination Numb~r Milting S,istflm Bucket & carry Dumping station Pipeline Herringbone parlor Other parlor NYmQer 0 3 28 30 1 Milking F:t:IilQuenC,i 2x/day 3x/day Other Numblilr 60 2 0 Progyction Re~ords DHIC Owner-Sampler Other None Numbe:t: 50 5 2 5 30 27 5 The averages used in this report were compiled using data from all the participating dairy farms in this region unless noted otherwise. There are full-time dairy farms, part-time farms, dairy cash-crop farms, farm renters, partnerships, and corporations included in the average. These specific classifications are used to separate farms in the State Business Summary. Income Statlilment In order for an income statement to accurately measure farm income, it must include cash transactions and accrual adjustments (changes in accounts payable, accounts receivable, inventories, and prepaid expenses). Cash paid is the actual cash paid during the year and does not necessarily represent the cost of goods and services actually used. Change in invlilntor,i: An increase in inventory is subtracted in computing accrual expenses because it represents purchased inputs not actually used during the year. A decrease in inventory is added to expenses because it represents the cost of inputs purchased in a prior year and used this year. 3 CASH AND ACCRUAL FARM EXPENSES 62 Northern Hudson Region Dairy Farms, 1989 Change in Inventory Change in Accounts or Prepaid Cash Pa,yable Paid + Expense* + -3 $ 25,325 $ -16 $ Expense Item Hired Labor Feed Dairy grain & conc. Dairy roughage Nondairy Accrual Expenses $ 25,306 63,550 3,052 117 -1,286 -29 0 325 80 20 62,589 3,103 137 1,917 13,380 817 6,443 0 -1 0 -30 21 -471 0 -2 1,938 12,908 817 6,411 4,584 3,363 5,674 14,585 214 10,239 0 -45 -56 0 0 -43 -24 -2 4 27 0 -83 4,560 3,316 5,622 14,612 214 10,113 10,410 3,897 3,870 -213 -199 -215 191 45 54 10,388 3,743 3,709 5,644 6,201 6,040 -105 -57 -69 -266 68 -30 5,273 6,212 5,941 3,969 1,010 5,692 16,078 2,760 $218,831 1,724 -180 0 0 0 25 $ -2,519 0 15 0 -36 53 48 34 0 3,804 1,010 5,656 16,131 2,833 $216,346 1,724 13,883 7,296 $239,249 Machine.:~ Mach. hire, rent/lease Machinery repairs/parts Auto expo (farm share) Fuel, oil & grease Li,v§stock Replacement livestock Breeding Vet & medicine Milk marketing Cattle lease/rent Other livestock expense Crops Fertilizer & lime Seeds & plants Spray, other crop expo Real f,;state Land/bldg./fence repair Taxes Rent & lease Othe.: Insurance Telephone (farm share) Electricity (farm share) Interest paid Miscellaneous Total Operating Expansion livestock Machinery depreciation Building depreciation TOTAL ACCRUAL EXPENSES $ Chan~es in prepaid expenses are a net change in non-inventory expenses that have been paid in advance of their use, for example, 1990 rent paid in 1989. If 1989 funds used to prepay 1990 rent exceeded the amount of 1989 rent pre­ paid in 1988, the amount of this excess is entered as a negative number to exclude it from 1989 rental expenses. The excess prepaid rent should be charged against the future year's business operation. A decrease in prepaid rent is added to expenses because it represents use of resources during this year that were paid for in past years but should be charged against this year's operation. Change in accounts payable: An increase in accounts payable from beginning to end of year is added and a decrease is subtracted when calculating accrual expenses. Accrual expenses are the costs of inputs actually used in this year's produc­ tion. They are the total of cash paid, changes in inventory or prepaid expenses, and changes in accounts payable. 4 CASH AND ACCRUAL FARM EXPENSES WORKSHEET Cash Expense Item Paid Hired Labor $ Feed Dairy grain & conc. Dairy roughage Nondairy Machinery Mach. hire, rent/lease Machinery repairs/parts Auto expo (farm share) Fuel, oil & grease Livestock Replacement livestock Breeding Vet & medicine Milk marketing Cattle lease/rent Other livestock expense Crops Fertilizer & lime Seeds & plants Spray, other crop expense Real Estate Land, bldg., fence rep. Taxes Rent & lease Other Insurance Telephone (farm share) Electricity (farm share) Interest paid Miscellaneous Total Operating $_-­ Expansion livestock Machinery depreciation Building depreciation TOTAL ACCRUAL EXPENSES Change in Inventory or Prepaid Change in + Expense + Accounts Payable Accrual Expenses $_-­ $_-­ $_-­ $_-­ $_-­ $_-­ $ 5 CASH AND ACCRUAL FARM RECEIPTS 62 Northern Hudson Region Dairy Farms, 1989 Receipt Item Cash Receipts Change in Inventory + Milk sales $238,763 Dairy cattle 14,937 $ Dairy calves 4,389 Other livestock 170 I, 996 Crop,s 3,246 Government receipts Custom machine work 403 206 Gas tax refund Other 3,377 (-) Less nonfarm noncash cap.** Total Accrual Receipts $267,488 $ + Change in Accounts Receivable 3,710 15 $ 1,675 13 o 55 74 -37 291 -21* o o o 613 1,387 3,776 $ Accrual Receipts $242,473 16,627 4,402 225 2,362 3,188 403 206 3,377 (-) 613 $272,651 *Change in advanced government receipts. **Gifts or inheritances of cattle or crops included in inventory. Cash receipts include the gross value of milk checks received during the year plus all other payments received from the sale of farm products, services, and government programs. Nonfarm income is not included in calculating farm profitability. Changes in inventory are calculated by subtracting beginning of year values from end of year values excluding appreciation. Increases in livestock in­ ventory caused by herd growth and/or quality are added, and decreases caused by herd reduction and/or quality are subtracted. Changes in inventories of crops grown are also included. Changes in advanced government receipts are calculated by subtracting the end year balance from the beginning year bal­ ance (balances are listed with the current liabilities on the Balance Sheet). Changes in accounts receivable are calculated by subtracting beginning year balances from end year balances. The January milk check for this December's marketings compared with the previous January's check is included as a change in accounts receivable. Accrual receipts represent the value of all farm commodities produced and services actually generated by the farmer during the year. CASH AND ACCRUAL FARM RECEIPT WORKSHEET Re~eipt Item Cash Receipts Milk sales $ Dairy cattle Dairy calves Other livestock Crops Government receipts Custom machine work Gas tax refund Other Less gifts of cattle &: crops Total Accrual Receipts $ Change in Inventory + + Change in Accounts Receivable $ Accrual Receipts $ $ (-) $ (-) $ $ 6 Profitability Analysis Farm operators contribute labor, management, and capital to their businesses and the best combination of these resources maximizes income. Farm profitability can be measured as the return to all family resources or as the return to one or more individual resources such as labor and management. Net farm income is the return to the farm operators and other unpaid family members for their labor, management, and equity capital. It is the farm family's net annual return from working, managing, financing, and owning the farm business. This is not a measure of cash available from the year's business operation. Cash flow is evaluated later in this report. Net farm income is computed both with and without appreciation. Appreciation represents the change in values caused by annual changes in prices of live­ stock, machinery, real estate inventory, and stocks and certificates (other than FLB and PCA). Appreciation is a major factor contributing to changes in farm net worth and must be included for a complete profitability analysis. NET FARM INCOME 62 Northern Hudson Region Dairy Farms, 1989 Item Average Total accrual receipts Appreciation: Livestock Machinery Real Estate Other Stock/Certificates Total Including Appreciation Total accrual expenses Net Farm Income (with appreciation) Net Farm Income (without appreciation) My Farm $272,651 10,212 1,475 18,476 -304 $302,508 -239,249 $ 63,259 $ 33,400 $_-­ $_-­ $_-­ $_--­ Return to operators' labor. management. and eQuity capital measures the total net farm income for the farm operator(s). It is calculated by deducting a charge for unpaid family labor from net farm income. Operators' labor is not included in unpaid family labor. Return to operators' labor, management, and equity capital has been calculated both with and without appreciation. Appreciation is considered an important part of the return to ownership of farm assets. RETURN TO OPERATORS' lABOR, MANAGEMENT, AND EQUITY 62 Northern Hudson Region Dairy Farms, 1989 Item Net farm income Family labor unpaid @ $750 per month Return to operators' labor, management, & equity Average With Without Apprec. Apprec. $ 63,259 $ 33,400 2.661 2.661 $ 60,598 $ 30,739 My Farm With Without Apprec. Apprec. $_--­ $_--­ $_-­ ,$_--­ 7 Labor and management income is the return which farm operators receive for their labor and management used in operating the farm business. Appreciation is not included as part of the return to labor and management because it results from ownership of assets rather than management of the farm business. Labor and management income is calculated by deducting the opportunity cost of using equity capital at a real interest rate of five percent, from the return to operators' labor, management, and equity capital excluding appreciation. The interest charge of five percent reflects the long-term average rate of return above inflation that a farmer might expect to earn in comparable risk investments. lABOR AND MANAGEMENT INCOME 62 Northern Hudson Region Dairy Farms, 1989 Item Average Return to operators' labor, management, & equity without appreciation Real interest @ 5% on $496,392 average equity capital Labor & Management Income Labor & Management Income per 1.34 Operator/Manager My Farm $ 30,739 $_-­ - 24,820 $ 5,919 $_-­ $ $_-­ 4,417 Return on equity capital measures the net return remaining for the farmer's equity or owned capital after a charge has been made for the owner-operator's labor and management. The earnings or amount of net farm income allocated to labor and management is the opportunity cost of operators' labor and management estimated by the cooperators. Return on equity capital is calculated with and without appreciation. The rate of return on equity capital is determined by dividing the amount returned by the average farm net worth or equity capital. Return on total capital is calculated by adding interest paid to the return on equity capital and then dividing by average farm assets to calculate the rate of return on total capital. RETURN ON EQUITY CAPITAL AND RETURN ON TOTAL CAPITAL 62 Northern Hudson Region Dairy Farms, 1989 Item Return to operators' labor, management, & equity capital with appreciation Value of operators' labor & management Return on equity capital with appreciation Interest paid Return on total capital with appreciation Return on equity capital without appreciation Return on total capital without appreciation Rate of return on average equity capital: with appreciation without appreciation Rate of return on average total capital: with appreciation without appreciation Average $ $ $ $ $ $ 60,598 28,044 32,554 16,131 48,684 2,695 18,825 My Farm $_--­ $_-­ $_-­ $_--­ $_-­ $_-­ 6.6% 0.5% --_% ---_% 6.9% 2.7% ---_% --_% 8 Farm and Family Financial Status The first step in evaluating the financial position of the farm is to construct a balance sheet which identifies all the assets and liabilities of the business. The second step is to evaluate the relationship between assets, liabilities, and net worth and changes that occurred during the year. 1989 FARM BUSINESS & NONFARM BALANCE SHEET 62 Northern Hudson Region Dairy Farms, January 1, 1990 Farm Liabilities Farm Assets Dec. 31 Jan. 1 Current Farm cash, checking & savings $ 7,240 Accounts rec. 19,611 Prepaid expo 60 Feed & supplies 49.348 Total $ 76,259 Intermediate Dairy cows: owned $ 86,852 leased o Heifers 33,862 Bulls/other 1vstk. 1,466 Mach./eq. owned 107,501 Mach./eq. leased 923 FLB/PCA stock 8,476 Other stock/cert. 11.027 Total $250,107 Long-Term Landjbuildings : owned $351,775 leased 516 Total $352,291 Total Farm Assets $678,657 $ 9,596 23,387 382 51. 835 $ 85,200 $ 96,991 o 35,512 1,618 118,271 1,565 6,152 10.618 $270,727 $368,893 270 $369,163 $725,090 (Average for 31 farms reporting) Nonfarm Assets* Jan. 1 Dec, 31 & Net Worth Dec. 31 Jan. 1 Current Accounts payable $ 8,425 Operating debt 6,628 Short-term 499 Advanced govt. rec. _ _--"'-0 $ 8,458 6,451 726 21 $ 15,552 $ 15,655 $ 71,237 $ 84,768 923 8,476 1,565 6.152 $ 80,636 $ 92,484 $104,036 $101,814 516 $104,552 270 $102,084 $200,740 $477,917 $210,223 $514,866 Nonfarm Liabi1ities* Jan. 1 Dec. 31 Total Intermediate Structured debt 1-10 years Financial lease (cattle/mach. ) FLB/PCA stock Total Long Term Structured debt ;J!:10 yrs Financial lease (structures) Total Total Farm Liab. FARM NET WORTH & Net Worth Personal cash, chkg. Nonfarm Liab, $ 1,415 $ 1,689 & savings $ 7,153 $ 7,382 NONFARM NET WORTH $ 39,716 $ 42,886 Cash value life ins. 7,208 7,846 Nonfarm real estate 7,000 7,323 FARM ~ NONFARM* Des;:, 31 Jan. 1 Auto (personal sh.) 2,358 2,923 Total Assets $719,788 $769,665 Stocks & bonds 3,007 2,918 Total Liabilities 202,156 211,913 Household furn. 7,981 9,965 All other 6.425 6.219 TOTAL FARM & NON­ Total Nonfarm $ 41,131 $ 44,575 FARM NET WORTH $517,632 $557,752 *Assumes that average nonfarm assets and liabilities for the nonreporting farms were the same as for those reporting. Financial lease obligations are included in the balance sheet. The present value of all future payments is listed as a liability since the farmer is committed to make the payments by signing the lease. The present value is also listed as an asset, representing the future value the item has to the business. For 1989, leases were discounted by 11.5 percent. 9 Advanced government receipts are included as current liabilities. Government payments received in 1989 that are for participation in the 1990 program are the end year balance and payments received in 1988 for participation in the 1989 program are the beginning year balance. Date ______________________________ 1989 FARM BUSINESS & NONFARM BALANCE SHEET Farm Liabilities Jan, 1 Farm Assets Dec, 31 & Net Worth Jan. 1 Dec. 31 Nonfarm Liabilities & Net Worth Jan. 1 Dec. 31 Current Farm cash, checking & savings Accounts rec. Prepaid expense Feed & supplies Total Current Accounts payable Operating debt: Intermediate Dairy cows: owned leased Heifers Bulls/other lvstk. Mach./eq. owned Mach./eq. leased FLB/PCA stock Other stock/cert. Total Adv. govt. rec. Total Intermediate Short Term: Financial lease (cattle/mach. ) FLB/PCA stock Total Long-Term Long-Term Land/buildings : owned leased Financial lease (structures) Total Total Farm Liab. FARM NET WORTH Total Total Farm Assets Nonfarm Assets Jan. 1 Dec. 31 Personal cash, chkg. & savings Cash val. life ins. Nonfarm real est. Auto (pres. share) Stocks & bonds Household furn. All other Total Nonfarm Nonfarm Liab. : ------- TOTAL FARM & NONFARM Total Farm & Nonfarm Assets Less Total Farm & Nonfarm Liabilities Farm & Nonfarm Net Worth Total Nonfarm Liabilities Nonfarm Net Worth Jan. 1 Dec. 31 10 Balance sheet analysis involves examination of relative asset and debt levels for the business. Percent equity is calculated by dividing end of year net worth by end of year assets. The debt to asset ratio is compiled by dividing liabilities by assets. Low debt to asset ratios reflect business solvency and the potential capacity to borrow. Debt levels per productive unit represent old standards that are still useful if used with measures of cash flow and repayment ability. The change in farm net worth without appreciation is an excellent indicator of farm generated financial progress. BALANCE SHEET ANALYSIS 62 Northern Hudson Region Dairy Farms, 1989 My Farm Average Item Financial Ratios - Farm: Percent equity Debt/asset ratio: total long-term intermediate/current Change in Net Worth: Without appreciation With appreciation Farm Debt Analysis: Accounts payable as % of total debt Long-term liabilities as a % of total debt Current & inter. liab. as a % of total debt Farm Debt Levels: Per Cow Total farm debt $ 2,145 Long-term debt 1,042 Intermediate & current debt 1,103 71% 0.29 0.28 0.30 $ 7,091 36,950 $ $ 4% 49% % % % 51% Per Tillable Acre Owned $ 1,374 667 707 Per Tillable Ac;[e Owneg $ Pe;[ Cow $ Farm inventory balance is an accounting of the value of assets used on the balance sheet and the changes that occur from the beginning to end of year. Changes in the livestock inventory are included in the dairy analysis. Net investment indicates whether the capital stock is being expanded (positive) or depleted (negative). FARM INVENTORY BALANCE 62 Northern Hudson Region Dairy Farms, 1989 It~m My Avg. of RegioDal Farms R.E. Mach. LEg. Value beg. of year $351,775 $107,501 Purchases $ 14,694* $ 24,246 $ Gift/inheritance + 0 0 + + Lost capital 5,196 Sales 3,372 1,069 Depreciation 7,296 - 13,883 Net investment 9,294 - -1,170 Appreciation + 18,289** + 1,47~ Value end of year $368,893 $118,271 Farm Mach,LEg. R....L $ $ $ + -+ + -+ + $ $ *$ 185 land and $ 14,509 buildings and/or depreciable improvements. **Excludes $187 of appreciation on assets sold during the year. 11 Cash Flow Statement Completing an annual cash flow statement is an important step in understanding the sources and uses of funds for the business. Understanding last year's cash flow is the first step toward planning and managing cash flow for the current and future years. The annual cash flow statement is structured to compare all the cash inflows with all the cash outflows for the year. A complete list of cash inflows and cash outflows are identified in the following table. By definition, total cash inflows must equal total cash outflows when beginning and ending balances are included. Any imbalance is, therefore, the error from incorrect accounting of cash inflows and cash outflows. Whenever an imbalance exists, all other financial measures may also be in error. ANNUAL CASH FLOW STATEMENT 62 Northern Hudson Region Dairy Farms, 1989 Item Average Cash Inflows Beginning farm cash, checking & savings Cash farm receipts Sale of assets: Machinery Real estate Other stock & certificate Money borrowed (intermediate & long-term) Money borrowed (short-term) Increase in operating debt Nonfarm income Cash from nonfarm capital used in the business Money borrowed - nonfarm Total Cash Outflows Cash farm expenses Capital purchases: Expansion livestock Machinery Real estate Other stock & certificate Principal payments (intermediate & long-term) Principal payments (short-term) Decrease in operating debt Personal withdrawals & family expenditures including nonfarm debt payments Ending farm cash, checking & savings Total Imbalance (error) - ------ -- $ 7,240 267,488 1,069 3,309 509 35,948 592 0 6,157 2,596 201 $325,109 $218,827 1,724 24,246 14,694 404 24,639 366 177 29,970 9,596 $324,643 466 $ ---- ----------------------------------._-------------------_._­ My Farm $_--­ $_--­ $_--­ $_--­ $_--­ 12 Repayment Analysis The second step in cash flow analysis is to compare the debt payments planned for the last year with the amount actually paid. The measures listed below provide a number of different perspectives on the repayment performance of the business. However, the critical question to many farmers and lenders is whether planned payments can be made in 1990. The cash flow projection worksheet on the next page can be used to estimate repayment ability, which can then be compared to planned 1990 debt payments shown below. FARM DEBT PAYMENTS PLANNED Same 48 Northern Hudson Region Dairy Farms, 1988 & 1989 Avequ~;e Debt Payments Long-term Intermediate-term Short-term Operating (net reduction) Accounts payable (net reduction) Total 1989 Payments Made Planned Planned 1990 $ 12,783 21,499 339 $ 12,856 29,211 490 $ 12,630 27,098 362 716 61 1,270 604 564 1.062 $ 35,941 $ 43,181 $ 42,423 Per cow $ Per cwt. 1989 milk $ Percent of total 1989 receipts Percent of 1989 milk receipts 366 2.16 $ $ 440 2.60 13% 15% 14% 17% My Fam 1989 Payments Planned Made Planned 1990 $ $ $ $ $ $ $ $ $ $ The cash flow coveraie ratio measures the ability of the farm business to meet its planned debt payment schedule. The ratio shows the percentage of planned payments that could have been made with last year's available cash flow. Farmers who did not participate in DFBS last year will find in their report a cash flow coverage ratio based on planned debt payments for 1990. CASH FLOW COVERAGE RATIO Same 48 Northern Hudson Region Dairy Farms, 1988 & 1989 Item Cash farm receipts - Cash farm expenses + Interest paid - Net personal withdrawals from farm** (A) - Amount Available for Debt Service (B) - Debt Payments Planned for 1989 (as of December 31, 1988) (A + B) - Cash Flow Coverage Ratio for 1989 My Farm $276,480 225,397 16,694 26.715 $ 41,062 $_--­ $ 35,941 1.14 $_--­ $_--­ **Personal withdrawals and family expenditures less nonfarm income and nonfarm money borrowed. If family withdrawals are excluded, or inaccurately included, the cash flow coverage ra~o will be incorrect. 13 ANNUAL CASH FLOW WORKSHEET Item Average number of cows Accrual Oper. Receipts Milk Dairy cattle Dairy calves Other livestock Crops Misc. receipts Total Accrual Oper. Expenses Hired labor Dairy grain & conc. Dairy roughage Nondairy feed Mach. hire/rent/lease Mach. rpr./parts & auto Fuel, oil & grease Replacement lvstk. Breeding Vet & medicine Milk marketing Cattle lease Other livestock expo Fertilizer & lime Seeds & plants Spray/other crop expo Land, bldg. ,fence repair Taxes Real estate rent/lease Insurance Utilities Miscellaneous Total Less Int. Paid Regional Averaie (per cow) 95 $ 2,548 175 46 My Farm Total Per Cow 1989 Expected Change Projection $_ __ $_-­ $_--­ $_ __ $_-­ $_--­ $_ __ $_­ $._--­ 2 $ $ 25 75 2,871 266 658 33 1 20 144 67 48 35 59 154 2 106 109 39 39 55 65 62 40 70 30 2,104 $ Net Accrual Operating Income (total) (without interest paid) $ 73,047 - Change in lvstk./crop inv.* 1,387 - Change in accts. rec. 3,776 + Change in feed/supply inv.** -2,519 + Change in accts. payable*** -19 NET CASH FLOW $ 65,346 - Net personal withdrawals from farm (see footnote on pg. 12) 2~,6l2 Available for Farm Debt Payments & Investments $ 41,734 - Farm debt payments 40,756 Available for Farm Investment 978 $ - Capital purchases: cattle, machinery & improvements $ 41,068 Additional Capital Needed ---_$_--­ $_-- $_--­ $_-- $_--­ $ $ $ $ $ $ *Includes change in advance government receipts. **Includes change in prepaid expenses. ***Excludes change in interest account payable. -------------------------~.--~->~.----------------------~--------- 14 Croppin& Analysis The cropping program is an important part of the dairy farm business which is often inadequately managed. A complete evaluation of what the available land resources are, how they are being used, how well crops are producing, and what it costs to produce them is required to evaluate alternative cropping and feed purchasing choices. LAND RESOURCES AND CROP PRODUCTION 62 Northern Hudson Region Dairy Farms, 1989 Item Ky Farm Avera&e Lang Tillable Nontillable Other nontillable Total Owned 153 50 93 296 Crop Yi!i!lds Hay crop Corn silage 61 58 Acr!i!s 157 86 1 62 27 5 4 13 9 28 61 6 234 78 13 24 15 35 42 298 ~ Other forage Total forage Corn grain Oats Wheat Other crops Tillable pasture Idle Total Tillable Acres Rent!i!g 145 13 21 179 Total 298 63 114 475 Prodt:As;;re 2.48 tn 13.31 tn 4.48 tn 2.50 tn 3.16 tn 102.91 bu 37.48 bu 52.52 bu ~ Acres DK DK DK DK Rented Total ProdLAcre tn DK tn tn DK tn DK tn DK bu bu bu Average crop acres and yields compiled for the region are for the farms reporting each crop. Yields of forage crops have been converted to tons of dry matter using dry matter coefficients reported by the farmers. Grain production has been converted to bushels of dry grain equivalent based on dry matter information provided. The following measures of crop management indicate the relationship between forage production, forage production resources and the dairy herd. CROP MANAGEMENT FACTORS 62 Northern Hudson Region Dairy Farms, 1989 It!i!m Total tillable acres per cow Total forage acres per cow Harvested forage dry matter, tons per cow Average 3.13 2.46 7.78 Ky Farm 15 Cropp ins Analysis (continued) A substantial number of cooperators have allocated crop expenses among the hay crop, corn, and other crops produced. Fertilizer and lime, seeds and plants, and spray and other crop expenses have been computed per acre and per product ion unit for hay and corn. Additional expense items such as fu els, labor, and machinery repairs are not included. CROP RELATED ACCRUAL EXPENSES Northern Hudson Region Dairy Farms Reporting, 1989 Total Per Till. Acre Item Number of farms reporting Average number of acres Fertilizer & lime $ Seeds & plants Spray & other crop expense Total $ All Corn Per Acre Hay CIOP Per Per Ton DM ACIe 61 Corn Silage Per Ton DM Corn Grain Per Dry Shell Bu. 21 21 298 34.82 $ 12.55 144 16.22 $ 4.95 6.78 2.07 12,44 59.80 $ 3,36 24.53 $ 1,40 10.25 84 56.37 $ 26.69 13.20 6.25 24.62 $ 107.68 $ 5.76 25.21 $ $ $ 0.61 0.29 0,27 1.16 My Farm: Fertilizer & lime $ _ ­ Seeds & plants Spray & other crop expense Total $_­ $_- $_­ $_- $_­ $== $_­ $== $_­ --- $_­ $_­ Most machinery costs are associated with crop production and should be analyzed with the crop enterprise. Total machinery expenses include the major fixed costs (interest and depreciation), as well as the accrual operating costs. Although machinery costs have not been allocated to individual crops, they are shown below per total tillable acre. ACCRUAL MACHINERY EXPENSES 62 Northern Hudson Region Dairy Farms, 1989 Average Per Til. Total Expenses Acre Machinery Expense Item Fuel, oil & grease Machinery repairs & parts Machine hire, rent & lease Auto expense (farm share) Interest (5%) Depreciation Total 6,411 12,908 1,938 817 5,644 13,883 $ 41,601 $ 21.49 43.27 6.50 2.74 18.92 46,54 $ 139.45 $ My Farm Total Per Til. Expenses ACIe $_--­ $_--­ $_--­ $_-­ 16 Dairy Analysis Analysis of the dairy enterprise can tell a great deal about the strengths and weaknesses of the dairy farm business. Information on this page should be used in conjunction with DHI and other dairy production information. Changes in dairy herd size and market values that occur during the year are identified in the table below. The change in inventory value without appreciation is attributed to physical changes in herd size and quality. Any change in inventory is included as an accrual farm receipt when calculating all of the profitability measures on pages 6 and 7. DAIRY HERD INVENTORY 62 Northern Hudson Region Dairy Farms, 1989 H~ifers Dain: Cow§ Value QRen No. Value 25 $ 18,440 -1,628 1,851 23 $ 18,669 22 $ 10,073 -277 826 22 $ 10,622 Br~d Item Beg. year (owned) No. YSllue 95 $ 86,852 3,178 6,961 $ 96,991 + Change w/o apprec. + Appreciation End year (owned) End incl. leased Average number 97 98 95 No. Ca1v~s No. Value 24 $ 5,349 401 471 6,221 26 $ 71 (all age groups) My Farm: Beg. of year (owned) + Change w/o apprec. + Appreciation End of year (owned) End including leased Average number $_­ $_'­ $_­ $_­ $_­ $_­ $_­ $_­ (all age groups) Total milk sold and milk sold per cow are extremely valuable measures of productivity on the dairy farm. These measures of milk output are based on pounds of milk marketed during the year. Farm managers on DHI should compare milk sold per cow with their rolling herd average on the test date nearest December 31 to see how close the DHI estimate of milk produced is to actual milk sales. MILK PRODUCTION 62 Northern Hudson Region Dairy Farms, 1989 Item Total milk sold, 1bs. Milk sold per cow, 1bs. Average milk plant test, percent butterfat Average 1,608,518 16,900 3.68 My Farm 17 The cost of producing milk has been compiled using the whole farm method and is featured in the following table. Accrual receipts from milk sales can be compared with the accrual costs of producing milk per cow and per hundredweight of milk. Using the whole farm method, operating costs of producing milk are estimated by deducting nonmi1k accrual receipts from total accrual operating expenses including expansion livestock purchased. Total costs of producing milk include the operating costs of producing milk plus depreciation on machinery and buildings, the value of operators' labor and management, and the interest charge for using equity capital. Note that the cost of labor, management, and equity capital has been excluded in the intermediate calculation. ACCRUAL RECEIPTS FROM DAIRY AND COST OF PRODUCING MILK 62 Northern Hudson Region Dairy Farms, 1989 ~ Av~rage Item Acclual CQst§ of ProQucing Milk Operating costs Total costs w/o opers' labor, mgmt. & capital Total Costs Accrual Receipt§ From Hilk Total Per Cow Per Cwt. Total Fam Per Cow Per Cwt. $187,894 $ 1,974 $ 11.68 $ $ $ $211,734 $264,598 $ $ 2,225 2,780 $ $ 13.16 16.45 $ $ $ $ $ $ $242,473 $ 2,548 $ 15.07 $ $ $ The accrual operating expenses most commonly associated with the dairy enterprise are listed in the table below. Evaluating these costs per unit of production enables an evaluation of the dairy enterprise. DAIRY RELATED ACCRUAL EXPENSES 62 Northern Hudson Region Dairy Farms, ~989 Average Item Purchased dairy grain & concentrates Purchased dairy roughage Total Purchased Dairy Feed Purchased grain & conc. as % of milk receipts Purchased feed & crop expo Purchased feed & crop expo as % of milk receipts Breeding Veterinary & medicine Milk marketing Cattle lease Other livestock expense Per Cow $ 658 690 $ 878 $ 35 59 154 2 106 Per ,Cow Per Cwt. $ 3.89 0,19 $ $ $ 4.08 $ $ $ 5.19 $ --% $ $ 0.21 0.35 0.91 0.01 0.63 $ -­ ---ll $ My Farm Per Cwt. 26% 34% % $ 18 Capital and Labor Efficiency Analysis Capital efficiency factors measure how intensively the capital is being used in the farm business. Measures of labor efficiency are key indicators of management's success in generating products per unit of labor input. CAPITAL EFFICIENCY 62 Northern Hudson Region Dairy Farms, 1989 Per Worker Item Farm capital Real estate Machinery & equipment Capital turnover, years My Farm: Farm capital Real estate Machinery & equipment Capital turnover, years Per Tillable Acre Per Cow $234,905 $ 38,197 7,374 3,790 1,199 $ 2,353 Per Tillable Acre Owned $ 4,587 2,358 383 2.32 $_-­ $_-­ $_-- $_-­ LABOR FORCE INVENTORY AND ANALYSIS 62 Northern Hudson Region Dairy Farms, 1989 Labor Force Months Age Years of of Educ. 12 45 38 34 13 13 13 Operator number 1 Operator number 2 Operator number 3 Family paid Family unpaid Hired Total 4 1 5 4 11 36 + 12 ­ + Labor Efficiency Cows, average number Milk sold, pounds Tillable acres Work units LabQr Co§ts Value of operator(s) labor ($l,050/mo.) $ Family unpd.($750/mo.) Hired Total Labor $ Machinery Cost $ Total Labor & Mach. $ 95 1,-608,518 298 994 16,986 2,661 25,306 44,954 41,601 86,555 Worker Equivalent ------ Operator/Manager Equiv. Average Per Worker Total Tot~l 12 ­ 178 28 ~ $ $ $ 472 437 909 My Farm Total Per Worker 32 538,343 100 333 Average Per Per Til, Acre ~ow $ $ 20,643 6,401 1,000 2.99 Worker Equivalent 1.34 Operator/Manager Equiv. + 12 ­ My Farm: Total Operator's Value of Labor & Mgmt. $56.94 8.92 84.83 $150.69 $139.45 $290.14 Total My FaIl! Per Per Cg!i Iil. Aq;:e $ $ $ $ $ $ $ $ $ $ $ $ 19 COMPARATIVE ANALYSIS OF THE FARM BUSINESS Progress of the Farm Business Comparing your business with average data from regional DFBS coopera­ tors that participated in both of the last two years is one part of a business checkup. It is equally important for you to determine the progress your business has made over the past two or three years and to set targets or goals for the future. PROGRESS OF THE FARM BUSINESS Same 48 Northern Hudson Region Dairy Farms, 1988 & 1989 Average of 48 Farms* 1988 1989 Selected Factors Size of Business 98 98 Average number of cows Average number of heifers 72 72 1,600,818 1,660,813 Milk sold, 1bs. Worker equivalent 2.95 3.02 Total tillable acres 292 304 Rates of Production Milk sold per cow, 1bs. Hay DM per acre, tons Corn silage per acre, tons Labor Efficiency Cows per worker Milk sold/worker, 1bs. Cost Control Grain & conc. purchased as % of milk sales Dairy feed & crop expo per cwt. milk Labor & mach. costs/cow Capital Efficiency** Farm capital per cow Mach. & equip. per cow Capital turnover, years 16,356 2.72 14 16,911 2.44 33 541,757 33 550,103 26% $ $ 4.97 807 $ $ 6,906 1,122 2.35 $ $ $ 5.18 910 7,291 1,223 2.29 Profitability Net farm inc. w/o apprec. $ 34,458 $ 35,372 Net farm inc. w/apprec. $ 63,372 $ 65,951 Labor & mgt. income per oper./manager $ 6,314 $ 5,229 Rate of return on eq. capital w/apprec. 7.57% 6.82% Rate of return on all capital w/apprec. 7.12% 7.21% Financial Summary Farm net worth, end year $496,890 $529,917 Debt to asset ratio 0.29 0.28 Farm debt per cow $ 2,037 $ 2,083 *Farms participating both years. My Farm 1989 Goal 13 27% $ 1988 --_% --_% --_% $_ __ $_-_$_-­ $- - - - $ $_-­ $_-­ $_-­ $-~-$-~­ $ $_-­ $_-­ $_-­ $_-_$_-­ $ $_-­ $_-­ $ $_-­ --_% --_% --_% --_% --_% --_% $_-­ $_-_$_-­ $_-­ $ **Average for the year. $_-­ 20 Farm Business Charts The Farm Business Chart is a tool which can be used in analyzing a business by drawing a line through the figure in each column which represents the current level of management performance. The figure at the top of each column is the average of the top 10 percent of the 406 farms for that factor. The other figures in each column are the average for the second 10 percent, third 10 percent, etc. Each column of the chart is independent of the others. The farms which are in the top 10 percent for one factor would not necessarily be the same farms which make up the top 10 percent for any other factor. The cost control factors are ranked is not necessarily the most profitable. position is somewhere near the middle or of costs, and must be taken into account from low to high, but the lowest cost In some cases, the "best" management average. Many things affect the level when analyzing the factors. References to DFBS output page numbers for participating dairy farmers are provided in the table headings. FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS 406 New York Dairy Farms, 1988 Size of Busi.ness Worker No. Pounds Equivof Milk alent ~ows Sold (DFBS pg. 10) (10) (10) 302 7.6 5,478,274 4.5 150 2,555,561 3.6 118 1,965,272 3.2 99 1,667,766 2.9 84 1,377,121 Rates of Prgduct!on Pounds Tons Tons Corn Milk Sold Hay Crop Silage Per Cow DMLA!::;t:e Per Acre (9) 20,561 18,872 18,058 17,409 16,886 (8) 4.2 3.5 3.1 2.9 2.6 (8) 21 18 16 15 15 LabQr Effici.ency Cows Pounds Per Milk Sold Worker Per Worker (10) 50 40 36 33 31 (10) 832,165 666,980 603,280 561,713 514,877 -------------------------------------------------.-----------------------------­ 2.6 2.3 2.1 1.9 1.3 Grain Bought Per Cow (9) $286 401 463 522 572 72 62 55 47 36 1,156,002 1,000,552 857,485 716,763 542,182 % Feed is of Milk ReceiPts (9) 14% 20 23 26 27 16,298 15,785 15,024 14,142 11,650 2.4 2.2 2.0 1.7 1.2 Cost Control Machinery Labor 6. Costs Machinery ~ost§ Per CQw P~r ~Qw (10) (10) $219 $ 500 282 618 324 682 358 726 387 763 14 29 27 25 22 17 13 12 11 8 Feed 6. Crop Expenses Per COli (9) $ 449 564 623 678 735 467,076 432,494 397,092 347,768 266,376 Feed 6. Crop Expenses Per Cwt, Milk (9) $3.00 3.64 3.93 4.22 4.49 -~------------------------.--------------------------- -------------------------- 615 655 700 767 886 29 31 32 35 39 415 442 480 539 664 805 854 919 1,000 1,142 785 824 874 939 1,086 4.71 4.94 5.19 5.54 6.47 21 The next section of the Farm Business Chart provides for comparative analysis of the value and costs of dairy production. The profitability section shows the variation in farm income by decile and enables a dairy farmer to determine where he or she ranks by using several measures of farm profitability. Remember that each column is independently established and the farms making up the top decile in the first column will not necessarily be on the top of any other column. The dairy farmer who ranks at or near the top of most of these columns is in a very enviable position. FARM BUSINESS CHART FOR FARM MANAGEMENT COOPERATORS 406 New York Dairy Farms, 1988 Dairy Receipts Per Cow (9) $2,974 2,723 2,594 2,496 2,413 2,339 2,251 2,149 1,984 1,663 Dairy Receipts fer CHt. (9) $16.53 15.33 14.89 14.62 14.37 Oper. Cost Milk Per CQw (9) $ 878 1,170 1,309 1,409 1,506 14.17 13.98 13.72 13.30 12.65 Oper. Cost Milk f~r Cwt, (9) 5.97 $ 7.50 8.18 8.72 9.19 1,588 1,671 1,775 1,923 2,122 Total Cost Production PeI Cow (9) $1,697 1,980 2,092 2,206 2,303 Total Cost Production P~r Cwt. (9) $11.22 12.42 13.03 13.45 13.85 2,383 2,489 2,613 2,749 3,085 14.45 14.93 15.68 16.59 19.26 9.62 10.06 10.51 11.11 12.96 Profitability Net Farm Income With Without ARRres:;iation ARRrecil:t;ion (3) (3) $191,562 $152,016 91,674 64,178 71,488 47,392 59,330 39,075 48,938 32,619 40,055 32,386 24,193 16,077 -5 25,596 20,332 13,859 6,208 -11,890 Return to Operator's Labor, Labor & Manlgement Income MaDIgem~Dt. ~ Eguit~ CaR it l1 With Without Per Per ARRreciatiQn ARRr§!~iation OReIator faIm (3) (3) (3) (3) $150,408 $100,436 $190,109 $82,939 89,579 36,434 62,028 27,820 45,854 69,860 25,726 19,437 14,022 57,028 37,325 19,032 10,174 47,001 30,813 13,156 38,398 30,714 21,562 13,720 -1,766 24,169 17,339 11,857 3,924 -13,815 7,890 2,740 -4,487 -11,265 -33,523 6,156 2,308 -3,781 -9,151 -34,040 Farm Business Charts for farms with freesta11 barns and 120 cows or less and more than 120 cows, and farms with conventional barns with 60 cows or less and more than 60 cows are discussed in the section on pages 23-28. 22 Financial Analysis Chart The farm financial analysis chart is designed just like the Farm Business Chart and may be used to measure the financial health of the farm business. Most of the financial measures used in the chart are defined on pages 7, 10, 12, and 18 of this publication. References to DFBS output page numbers for participating dairy farmers are provided in the table headings. FINANCIAL ANALYSIS CHART 406 New York Dairy Farms, 1988 Debt Payments Mad~ Pe;k C2W (DFBS pg. 7) $ Liguidity !~~2a~entl Debt Payments Cash Flow as Percent Coverage 2f Milk R~~eiRts RaUo (7) (7) 61 203 293 373 435 494 563 639 742 1,161 3% 9 14 18 20 23 27 31 36 59 5.65 1.84 1.42 1.21 1.09 0.96 0.83 0.68 0.52 -0.29 Solvency D~btLAsset Ratio Long Te;km Available for Debt Service Pe;k Cow (11) $845 660 572 510 462 415 361 300 222 -23 Debt fe~ COl!! (5) $ 112 660 1,196 1,585 1,941 2,264 2,630 2,995 3,465 4,687 Efficiency ~ P;kofitabi1ity Total Capital Rate of Farm Cap. Turnover Return on Eguity CaR. Pe~ Cow !yea;k§} Percent Eguity (DFBS pg. 5) Current & (5) (5) (10) (10) (3) 98% 90 82 75 69 65 58 52 43 28 0.01 0.04 0.10 0.17 0.23 0.29 0.36 0.41 0.50 0.73 0.00 0.01 0.12 0.24 0.33 0.45 0.54 0.63 0.77 1.20 $4,110 4,849 5,231 5,620 5,989 6,334 6,806 7,358 8,214 10,357 1.51 1.81 1. 98 2.13 2.29 2.43 2.56 2.73 3.05 3.91 25% 13 10 Int~;kmediate 8 6 4 2 0 -4 -16 Summarize Y2ur Business Performance The Farm Business and Financial Analysis Charts can be used to help identify strengths and weaknesses of your farm business. Identify three major strengths and three areas of your farm business that need improvement. Strengths: Need Improvement: 23 Comparisons by Type of Barn and Herd Si~e When analyzing a dairy farm business by comparing it to a group of farms, it is important that the group of farms used has as many of the same physical characteristics as possible as the farm being analyzed. To assist in this endeavor, dairy farms in the 1988 State Summaryl have been divided into those with freestall and those with conventional housing. Within each group is a further classification by size of the dairy herd. The table on page 24 shows the average values for the resulting four groups of dairy farms. Within each housing type, the larger herd size has the highest crop yields and pounds of milk sold per cow. The total cost of producing milk was lower on the larger farms and labor efficiency greater. Profitability was also greater on the larger farms within each housing type. Farm business charts have been computed for each of the four housing and herd size categories. References to DFBS output page numbers for participating dairy farmers are provided in the table headings. From these charts on pages 25-28 the range in size of business, rates of production, labor efficiency, value and cost of producing milk, and profitability can be observed. The range in every category of business performance is tremendous. By comparing the farm's performance on the most appropriate business chart, a farm manager will be better able to evaluate his or her business performance. Farm managers should remember, however, that their competition is not limited to the other farms in their own barn type and herd size category. They should observe how their management performance compares with farms in other categories as well. Herd Size Comparisons A detailed comparison of profitability, financial situation, and business analysis factors across herd sizes is contained on pages 29-36. As herd size increases, the average profitability also increases (pages 29-30). Net farm income without appreciation was $233,809 per farm for the 300 or more herd size group and $12,875 per farm for those with less than 40 cows. This relationship holds for all measures of profitability including rate of return on equity capital. As herd size increases, percent equity generally decreases (pages 31-34). However, farm net worth increases substantially as herd size increases. The average net worth for all size farms increased during 1988. Crop yields generally increased as herd size increased, but fertilizer and lime expenses and machinery cost per tillable acre also increased (pages 35-36). Milk sold per cow generally increased as herd size increased, ranging from 15,833 pounds on the farms with 40 to 54 cows to 19,113 pounds on farms with 300 or more cows. Farm capital per worker increased as herd size increased, while farm capital per cow decreased as herd size increased. Cows per worker increased dramatically as herd size increased, ranging from 20 at the lowest herd size category up to 45 at the largest size category. lSmith. Stuart F., Wayne A. Knoblauch, and Linda D. Putnam, Dairy Farm Management Business Summary. New York. 1988, Department of Agricultural Economics, Cornell University, A.E. Res. 89-12, August 1989. --~---~.- -----------­ 24 SELECTED BUSINESS FACTORS BY TYPE OF BARN AND HERD SIZE 406 New York Dairy Farms, 1988 Farms with: Item Conv~ntlQnftl ~60 ~Qw§ Number of farms CrORRin& PIO&ram An~lxsis Total Tillable acres Tillable acres rented* Hay crop acres* Corn silage acres* Hay crop, tons DM/acre Corn silage, tons/acre Oats, bushels/acre Forage DM per cow, tons Tillable acres/cow Fert. & lime exp./ti1. acre Total machinery costs Machinery cost/tillable acre >~O COWl! 117 139 149 45 96 28 2.2 12.8 39.4 7.3 3.2 $21. 87 $18,754 $126 292 98 168 55 2.5 14.0 48.7 7.8 3.4 $24.92 $35,266 $121 Dairx Ana1xsis Number of cows 46 35 Number of heifers Milk sold, 1bs. 745,373 Milk sold/cow, 1bs. 16,150 Operating cost of prod. mi1k/cwt. $9.49 Total cost of prod. mi1k/cwt. $15.35 Price/cwt. milk sold $12.90 Purchased dairy feed/cow $620 Purchased dairy feed/cwt. milk $3.84 Purc. grain & conc. as % milk rec. 28% Purc. feed & crop exp./cwt. milk $4.59 ~l20 Free§t5!l1 Cows >120 Cows 85 65 259 85 133 59 2.5 14.7 40.9 7.5 3.1 $29.68 $37,311 $144 560 209 237 181 2.9 14.3 45.3 7.2 2.6 $34.57 $82,010 $146 1,428,224 16,485 $9.25 $13.97 $12.88 $587 $3.56 27% $4.47 84 69 1,381,093 16,496 $9.36 $14.14 $13.03 $608 $3.68 27% $4.67 171 3,797,957 17 ,468 $9.64 $12.88 $13 .15 $660 $3.78 28% $4.70 87 72 217 CaRit~l Efficiencx Farm capital/worker Farm capital/cow Farm capital/til. acre owned Real estate/cow Machinery investment/cow Capital turnover, years $165,397 $6,874 $3,050 $3,637 $1,242 2.58 $190,032 $6,367 $2,829 $3,056 $1,186 2.38 $191,181 $6,391 $3,075 $2,944 $1,264 2.33 $220,397 $5,688 $3,523 $2,574 $915 1.97 Labor Efflci~ncx Worker equivalent Operator/manager equivalent Milk sold/worker, 1bs. Cows/worker Work units/worker Labor cost/cow Labor cost/tillable acre 1.92 1.17 388,601 24 252 $427 $132 2.90 1.44 492,003 30 325 $390 $115 2.80 1.40 493,473 30 322 $388 $126 5.61 1.43 676,903 39 395 $431 $167 $32,593 $8,213 $1,935 70% $31,035 $8,928 $2,265 65% $86,118 $31,202 $2,018 65% Profltabl1itx ~ B~lance She~t Net farm income (w/o apprec.) Labor & mgmt. income/operator Farm debt/cow Percent equity An~lxsis $15,113 $2,387 $2,424 65% *Average of all farms, not only those reporting data. 25 FARM BUSINESS CHART FOR SMALL CONVENTIONAL STALL DAIRY FARM 117 Conventional Stall Dairy Farms with 60 or Less Cows, New York, 1988 ~Uze Worker Equiv­ alent (DFBS pg. 10) of By§ines§ Pounds No. of Milk Sold ~g!iS 3.0 2.4 2.2 2.1 2.0 (10) (10) 58 56 54 51 49 1,069,621 952,284 883,230 828,725 760,558 Rates of Prodyct1gn Pounds Tons Tons Corn Milk Sold Hay Crop Silage Pel: ~2ll!: DMLAS:l:e fel: ACl:~ (9) 20,399 18,512 17,716 17,216 16,604 Labor Cows Per Worker (8) (8) (10) 40 33 29 27 25 20 18 17 15 14 3.8 3.1 2.8 2.6 2.4 Effis;<1e!lc~ Pounds Milk Sold Per HOl:k~r (10) 672 ,046 562,928 469,994 433,894 414,271 -------------~---------------------------------------- -------------------------- 46 43 40 37 29 2.0 1.7 1.5 1.3 1.0 716,896 676,549 628,044 566,471 427,103 Grain Bought Pel: ~ow (9) % Feed is $318 418 466 518 554 23% 28 31 33 35 of Milk Receiuts (9) 16,054 15,273 14,721 13,809 11,901 2.3 2.0 1.9 1.7 1.2 12 10 10 7 Cost Control Machinery Labor & Costs Machinery Co§ts P~l: Cgl1: P~l: ~ow (10) (10) $197 250 315 364 392 $ 24 23 21 19 15 13 554 692 755 804 841 385,463 353,856 330,435 292,749 226,460 Feed & Crop Expenses fer ~ow (9) Feed & Crop Expenses Per Cwt. Milk (9) 455 550 600 644 713 $3.02 3.57 3.93 4.22 4.47 $ --------------------------------~--------------------- -------------------------- 593 641 710 781 896 Ya1u~ Milk Receipts Per Cow (9) $2,631 2,411 2,289 2,200 2,122 36 38 40 44 50 426 451 488 538 647 and ~ost of frodyct1Qn Oper. Cost Total Cost Milk Production Per Cwt. P~r Cwt, (9) (9) $ 6.23 7.69 8.23 8.68 9.22 $12.22 13.25 14.00 14.57 15.09 759 812 872 952 1,092 899 941 1,013 1,069 1,192 4.68 4.90 5.18 5.58 6.70 ~rofi tabUi t~ Net Fal:l!! InS;<Qme With Without ADures;<. Auu rec , (3) (3) $66,048 45,717 38,199 31,413 27,367 $40,605 31,042 24,592 20,824 16,987 Labol: & Mgmt. Income Per Ouer. Per FaD!! (3) (3) $26,515 18,240 12,447 8,024 5,314 $25,175 15,171 10,259 6,890 4,522 --------------.---------------------------------------------------.------------­ 2,064 1,975 1,886 1,756 1,545 9.64 10.09 10.53 11.26 13.48 15.62 16.24 16.70 17.41 21.06 22,397 19,247 16,846 10,388 -402 13,416 9,008 6,522 2,017 -9,679 2,240 -1,921 -5,605 -9,948 -24,960 2,113 -1,703 -5,125 -8,298 -21,802 26 FARM BUSINESS CHART FOR LARGE CONVENTIONAL STALL DAIRY FARMS 139 Conventional Stall Dairy Farms with More Than 60 Cows, New York, 1988 Siz~ Worker Equiv­ of ~!.!sin~ss a1~nt No. of CQws Pounds Milk Sold (DFBS Pg. 10) (10) (10) 4.7 3.7 3.3 3.1 2.9 141 112 98 93 83 2,455,689 1,887,601 1,724,659 1,531,719 1,396,207 Rates of Produ~tion Pounds Tons Tons Corn Milk Sold Hay Crop Silage Per Cow Per acre DHLA~re Labor Cows Per Wo;r;:ker (9) (8) (10) (10) 19,800 18,638 18,106 17,463 16,959 4.1 3.5 3.1 2.8 2.6 47 38 35 33 31 755,830 651,861 591,353 541,449 510,816 (8) 21 17 16 15 15 l;;ffic;lJm~;:L Pounds Milk Sold Pi\r WQrkilr -----------------------------------------------------.-------------------------­ 2.6 2.5 2.4 2.1 1.8 78 73 67 64 61 1,286,389 1,172,462 1,086,160 992,080 822,664 Grain Bought Per Cow (9) % Feed is of Milk Receia ts (9) $272 371 433 502 565 24% 28 30 32 33 16,331 15,846 15,340 14,294 11,490 2.4 2.2 2.0 1.7 1.2 12 11 8 Cost Control Labor & Machinery Costs Machinery Per Cow CQ§t§ Per CQw (10) (10) $221 285 327 358 391 29 28 26 23 19 14 13 476,869 445,549 410,818 373,760 293,815 Feed & Crop Expenses Per Cow (9) Feed & Crop Expenses Per Cwt. HUk (9) $429 541 607 658 701 $3.01 3.57 3.82 4.02 4.27 $526 647 698 750 787 ---------------------------~------------------------~- ---------.----.----------. 605 648 700 757 883 Va1u~ Milk Receipts Per Cow (9) 35 37 39 41 48 418 441 475 519 660 ang CQst Qf P;r;:oduction Oper. Cost Total Cost Milk Production Per Cwt. Per Cwt, (9) (9) 838 879 939 1,035 1,173 751 801 847 915 1,068 4.53 4.77 5.03 5.36 6.14 PrQfitabilit;:L Net [arm Incom~ With Without Labor ~ Mgmt. In~ome Per Doer, P~r Farm Aaa rec , Aaa rec , (3) (3) (3) (3) $2,590 2,425 2,339 2,256 2,174 $ 6.33 7.33 7.95 8.42 8.91 $11.06 12.27 12.97 13.28 13.58 $113,623 79,373 67,707 59,750 51,694 $69,808 54,563 46,491 41,639 35,314 $45,158 33,225 26,185 20,956 16,765 $40,726 23,975 19,075 15,497 11,634 2,120 9.27 9.76 10.27 10.94 12.89 14.05 14.55 15.13 16.09 18.79 46,333 40,463 34,299 24,116 2,703 31,497 26,457 21,668 11,595 *10,487 11,988 6,807 -1,047 -9,842 -30,954 8,446 4,985 -585 -7,205 -21,750 2,024 1,940 1,820 1,480 27 FARM BUSINESS CHART FOR SMALL FREESTALL DAIRY FARMS 65 Freesta11 Barn Dairy Farms with 120 or Less Cows, New York, 1988 Size of Business Worker Pounds No. Equiv­ of Milk alent Cows Sold (DFBS pg. 10) (10) (10) 115 108 105 100 92 4.2 3.5 3.3 3.1 3.0 R§t~s Pounds Milk Sold PeI Cow (9) 2,135,755 1,909,121 1,771,060 1,688,234 1,505,063 20,957 19,580 18,347 17,512 16,867 of fIOduction Tons Corn Tons Hay Crop Silage DM/Acre fer Acre (8) Labor Efficiency Cows Pounds Milk Sold Per Worker Per WOIker (10) (8) 21 20 18 16 15 3.9 3.4 3.1 2.9 2.8 46 39 36 34 31 (10) 738,383 637,748 582,787 559,711 525,414 -------------------------------------------------------------------------------- 2.8 2.6 2.3 2.1 1.6 84 78 70 59 42 1,365,945 1,191,775 1,061,328 872,566 610,624 Grain Bought Per CQw (9) % Feed is of Milk RecelRts (9) $258 416 454 511 583 23% 28 31 35 37 16,271 15,778 14,891 13,601 11,393 2.5 2.3 2.0 1.6 1.1 12 11 8 Cost Control Machinery Labor & Costs Machinery PeI Cow Costs Per Cow (10) (10) $234 302 346 369 396 $ 29 28 27 25 18 15 14 530 662 719 767 807 474,472 455,536 429,339 376,468 277,940 Feed & Crop Expenses fer Cow (9) Feed & Crop Expenses Per Cwt, Milk (9) 480 587 629 685 761 $2.91 3.65 3.98 4.47 4.78 $ -------------------------------------------------------------------------------635 672 712 781 883 38 40 41 44 53 Va1u~ Milk Receipts Per Cow (9) 439 510 561 603 767 gnd CQst of ProductiQD Oper. Cost Total Cost Milk Production Per Cwt. PeI Cwt. (9) (9) $2,677 2,502 2,361 2,269 2,175 $ 5.99 7.65 8.34 8.71 9.29 $11.76 12.36 13.01 13.42 14.01 852 900 1,036 1,153 1,344 800 839 896 995 1,152 5.00 5.28 5.51 5.89 6.95 PrQfi t§bili ty Nsat F§D!! lnscomsa With Without LabQr §! Msmt. Incomsa Ayyrec. Per FaD!! PeI Oyer, ARJ2rec, (3) (3) (3) (3) $122,057 86,612 72,241 60,248 51,410 $80,538 59,942 46,332 40,507 36,770 $50,935 36,940 27,220 22,245 16,212 $41,222 28,176 20,081 14,792 11,783 -------------------------------------------------------------------------------2,106 2,060 1,965 1,792 1,567 - . - .. 9.77 10.07 10.61 11.56 13.45 -~~- - - - - - - - -- 14.68 15.56 16.33 17 .14 18.97 ----.~ -.---~-~- 43,786 33,786 22,275 11,783 226 28,683 21,707 15,781 9,142 -13,498 12,431 7,906 -1,726 -10,710 -24,719 9,286 5,326 -1,838 -7,666 -22,741 28 FARM BUSINESS CHART FOR LARGE FREESTALL DAIRY FARMS 85 Freesta11 Barn Dairy Farms with More Than 120 Cows, New York, 1988 Size of Businil§S Worker No. Pounds Equiv­ of Milk alent Cows Sold (DFBS pg. 10) (10) (10) R~tes of frggyctigD Pounds Tons Tons Corn Milk Sold Hay Crop Silage p~[ Cgw fer ACril DMLA~[e (9) (8) Labor Cows Per Eff1cieD~~ Pounds Milk Sold Per Wgrker Work~r (8) (10) (10) 12.1 7.7 6.5 6.0 5.4 532 309 253 224 194 10,258,979 5,748,053 4,450,040 3,683,829 3,237,071 21,283 19,739 18,818 17,827 17,274 4.8 4.1 3.8 3.4 3.1 19 18 17 16 15 60 47 44 41 39 1,027,141 839,146 742,700 685,010 648,889 4.8 4.2 3.9 3.6 2.9 173 153 136 127 121 2,920,311 2,550,953 2,313,893 2,088,296 1,660,164 16,940 16,266 15,745 14,707 12,411 2.9 2.6 2.4 2.1 1.5 14 13 12 11 10 37 34 33 31 27 613 ,465 579,478 555,146 510,554 423,675 Grain Bought Per COli (9) % Feed is of Milk R!;!cei];!ts (9) $316 454 527 587 623 24% 30 32 34 36 Cost Control Machinery Labor & Costs Machinery Cg§ts fer Cgw fet !;;;gw (10) (10) $263 295 320 349 382 543 642 726 756 784 $ Feed & Crop Expenses feJ;: Cow (9) Feed & Crop Expenses Per Cwt. Milk (9) 487 644 737 775 811 $3.17 3.97 4.32 4.53 4.71 $ ------------------.------------~---------------------- -------------------------- 653 675 702 776 897 37 39 41 42 47 407 423 453 507 617 831 900 947 989 1,093 839 869 912 949 1,057 V~lue ~nd Milk Receipts Per Cow (9) $2,767 2,585 2,466 2,365 2,293 !;;;ost gf PJ;:gductioD Oper. Cost Total Cost Milk Production Per Cwt. Pet Cwt, (9) (9) $ 5.23 7.66 8.92 9.39 9.85 $10.40 11.77 12.33 12.87 13.20 4.91 5.13 5.30 5.60 6.31 Prgfit~bi,lit~ Net Farm In~ome With Without A];!];!r~~, ~];!re~. LaboJ;: ~ Mgmt. In~gme Per O];!er, (3) P~J;: F~m (3) (3) (3) $367,659 223,987 158,470 123,985 105,605 $308,013 166,492 114,554 87,002 71,945 $225,699 115,331 69,277 50,003 39,841 $195,726 74,508 48,997 37,563 24,763 -------------------------------------------------------------------------------2,232 2,145 2,045 1,949 1,650 10.29 10.51 10.77 11.11 12.23 13.63 13.88 14.36 14.85 16.60 90,906 74,583 63,368 41,941 12,620 62,101 44,749 33,199 20,940 -12,543 27,489 15,425 -177 -15,048 -50,857 18,851 12,052 133 -12,035 -43,219 29 FARM BUSINESS SUMMARY BY HERD SIZE 406 New York Dairy Farms, 1988 Item Farm Size: Number of farms Less than 40 Cows 29 40 to 54 Cows 55 to 69 Cows 70 to 84 Cows 85 to 99 Cows 67 81 53 36 ACCRUA~ EKfENSE~ Hired labor Dairy grain & concentrate Dairy roughage Nondairy feed Machine hire/rent/lease Machine repairs/parts Auto expense (farm share) Fuel, oil & grease Replacement livestock Breeding Veterinary & medicine Milk marketing Cattle lease/rent Other livestock expense Fertilizer & lime Seeds & plants Spray & other crop expense Landjbui1ding/fence repair Taxes & rent Telephone & electricity Interest paid Misc. (including insurance) Total Operating Expenses Expansion livestock Machinery depreciation Building depreciation Total Accrual Expenses $ 2,392 18,877 2,095 348 915 3,293 469 1,554 1,926 1,104 1,269 3,505 10 2,963 1,698 732 718 1,398 2,979 2,877 6,223 2,576 $59,921 672 4,924 2,41:2 $67,932 $ 4,607 27,003 1,749 144 1,517 4,837 415 2,208 1,023 1,568 1,675 4,900 52 4,874 3,465 1,340 1,021 1,478 5,209 3,635 9,444 3,13:2 $ 85,299 337 6,528 3,513 $ 95,737 $ 9,317 34,299 916 263 1,421 7,323 687 3,423 1,516 2,064 2,645 5,727 0 5,534 5,162 1,961 1,713 2,359 6,374 4,572 10,280 4,550 $112,106 176 9,639 4,964 $126,885 $ 14,404 43,702 1,524 685 1,436 8,357 665 4,240 1,318 2,436 3,397 7,365 352 6,974 6,944 2,953 2,178 2,200 7,877 5,304 12,466 5,601 $142,378 537 11,715 5,960 $160,590 $ 19,414 56,902 580 63 1,229 13,107 781 5,632 1,523 3,102 4,035 7,354 14 9,024 8,272 3,680 3,045 3,661 8,324 5,994 15,535 6,31:2 $177,586 1,253 15,214 6,460 $200,513 ACCRUAL RECEIPT~ Milk sales Dairy cattle Dairy calves Other livestock Crops Misc. receipts Total Accrual Receipts $69,058 6,296 1,809 479 1,936 1,230 $80,807 $ 96,366 7,934 2,074 131 977 J.258 $110,742 $126,139 10,340 2,580 115 2,558 4.97§ $146,708 $162,315 15,094 2,899 369 4,576 :2.572 $190,826 $206,315 18,421 3,494 318 4,331 §,31§ $239,195 $12,875 $20,258 $2,331 1.10 $2,119 $15,005 $28,129 $3,228 1.16 $2,782 $19,823 $33,894 $3,284 1.36 $2,415 $30,236 $45,986 $11,721 1.41 $8,313 $38,682 $61,521 $17,960 1.31 $13,710 PROFITABILIIX ANALY~IS Net farm income (w/o apprec.) Net farm income (w/apprec.) Labor & mgmt. income Number of operators Labor & mgmt. inc./oper. Rates of return on: Equity capital w/o apprec. Equity capital w/apprec. All capital w/o apprec. All capital w/apprec. -4.3% 0.0% -0.4% 2.5% -4.0% 2.8% 0.5% 4.7% -2.6% 2.2% 0.6% 3.9% 0.5% 5.2% 2.9% 6.1% 2.9% 9.1% 4.7% 8.9% 30 FARM BUSINESS SUMMARY BY HERD SIZE 406 New York Dairy Farms, 1988 Item Farm Size: 100 to 149 Cows 150 to 199 Cows 81 25 ACCRUAL EXPENSES Hired labor Dairy grain & concentrate Dairy roughage Nondairy feed Machine hire/rent/lease Machine repairs/parts Auto expense (farm share) Fuel, oil & grease Replacement livestock Breeding Veterinary & medicine Milk marketing Cattle lease/rent Other livestock expense Fertilizer & lime Seeds & plants Spray & other crop expense Land/bui1ding/fence repair Taxes & rent Telephone & electricity Interest paid Misc. (including insurance) Total Operating Expenses Expansion livestock Machinery depreciation Building depreciation Total Accrual Expenses $ 25,129 68,636 1,652 301 3,137 14,690 606 7,046 1,505 3,404 4,970 11,218 112 10,996 10,849 4,544 4,179 3,965 12,154 7,515 20,245 7.728 $224,581 1,445 16,826 8.646 $251,498 $ 52,976 107,553 1,725 ACCRUAL RECEIPTS Milk sales Dairy cattle Dairy calves Other livestock Crops Misc. receipts Total Accrual Receipts $256,607 19,533 4,526 556 6,714 10.966 $298,902 $376,291 33,320 6,676 472 9,520 18.255 $444,533 $47,404 $71,193 $20,551 1.48 $13,886 $52,624 $100,639 $16,348 1.56 $10,480 Number of farms PROFITABILITY ANALYSIS Net farm income (w/o apprec.) Net farm income (w/apprec.) Labor & mgmt. income Number of operators Labor & mgmt. inc./oper. Rate of return on: Equity capital w/o apprec. Equity capital w/apprec. All capital w/o apprec. All capital w/apprec. 2.8% 7.6% 4.6% 7.9% o 2,027 24,337 548 11,674 180 5,874 8,862 16,822 864 14,902 15,467 6,168 5,727 7,811 17,290 10,434 30,488 11.427 $353,156 2,175 23,211 13.367 $391,909 2.5% 9.4% 4.6% 9.2% 200 to 299 Cows 300 or More Cows 13 21 $ 79,337 $ 153,329 3,503 374 3,590 32,025 1,040 14,884 12,690 6,885 12,037 17,375 o 21,193 24,072 9,696 9,390 10,295 16,508 13,990 38,183 15.598 $505,994 3,046 33,872 19.946 $562,858 200,247 323,183 11,127 2,971 6,976 44,595 949 22,566 2,072 13,345 29,107 28,057 1,700 44,593 30,893 12,581 16,835 18,413 36,340 22,305 82,861 27.380 $ 979,096 42,433 51,018 47,793 $1,120,340 $530,450 $1,148,224 50,614 122,913 10,489 20,435 2,292 2,655 11,087 26,097 27.459 33.826 $632,391 $1,354,149 $69,533 $98,371 $25,100 1.42 $17,676 3.9% 7.2% 5.4% 7.6% $233,809 $280,953 $162,342 1.47 $110,437 13.4% 16.8% 11.3% 13.3% 31 FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 406 New York Dairy Farms, 1988 Item Farms with: Less than !to COlllS !lee, 31 Jan, 1 ASSETS Farm cash/chkg./sav. $ 4,457 Accounts receivable 5,424 Prepaid expenses 0 11,232 Feed & supplies Livestock* 42,673 Machinery & equipment* 43,066 FLB & PCA stock 935 1,333 Other stock & cert. Land & bui1dings* 133,71Z Total Farm Assets $242,837 Pers. cash/chkg./sav.$ 1,701 Cash value of life ins. 1,045 Nonfarm real estate 17,714 Auto (personal share) 1,386 Stocks & bonds 2,509 Household furnishings 7,095 All other !t,939 Tot. Nonfarm Assets**$ 36,389 Total Farm & Nonfarm Assets $279,226 LIAIULITIES Accounts payable Operating debt Short term Advanced gov't. rec. Intermediate*** Long term* Total Farm Liab. Tot. Nonfarm Liab.** Total Farm & Nonfarm Liabilities Farm Net Worth (Equity Capital) Farm & Nonfarm Net Worth 4Q to 24 COWl! De~, 31 J51n, 1 3,074 6,196 15 13,321 45,140 46,651 912 1,131 139,6Z0 $256,110 $ $ 2,830 1,171 20,095 2,943 3,068 7,619 4,436 $ 42,162 2,675 9,132 0 17,800 60,707 57,184 1,289 2,311 169,451 $320,550 55 tg 62 Cow:z J51n. 1 De~, 31 3,845 10,443 74 26,495 79,513 77,112 2,559 3,363 4,036 11,770 52 28,566 83,341 79,800 2,629 3,660 223,496 $437,350 2,714 8,003 0 16,895 56,489 54,871 1,403 2,194 163,123 $305,692 $ $ 2,898 2,772 29,421 2,892 1,618 8,468 2,58Z $ 50,657 $ 3,147 3,806 34,017 3,659 2,885 9,336 2,757 $ 59,608 $ 8,002 3,668 34,463 3,040 3,577 7,775 1,870 62,394 $ $ $298,272 $356,349 $380,158 $479,053 $505,044 $ $ 21~,256 $416,659 $ 9,051 3,967 37,286 3,456 3,682 7,790 2,462 $ 67,694 $ 1,502 388 933 0 23,857 54,881 $ 81,562 805 $ 1,478 451 1,648 0 23,556 5J,469 $ 80,602 l,24Z $ 4,338 1,462 1,216 0 38,415 Z8,049 $123,480 2.009 $ 4,799 1,912 1,265 0 38,787 74,331 $121,099 2,308 $ 3,275 851 1,481 0 46,980 80,2Z2 $132,859 2,738 $ $ 82,367 $ 81,849 $125,489 $123,407 $135,597 $140,514 $161,275 $175,508 $182,212 $199,451 $283,801 $303,794 $196,859 $216,423 $230,860 $256,751 $343,456 $364,530 FINANCIAL MEASURES Less than 4Q Cgws Percent equity 69% Debt/asset ratio~long term 0.38 Debt/asset ratio-inter. & current 0.23 Change in net worth with apprec. $14,232 Total farm debt per cow $2,303 Debt payments made per cow $430 Debt payments as % of milk sales 21% Amount avail. for debt service $14,628 Cash flow coverage ratio for 1988 1.08 40 to 54 Cows 62% 0.44 0.31 $17,238 $2,577 $445 21% $23,140 1.15 3,769 1,026 1,291 0 47,843 79,62Z $133,556 6,258 55 to 69 Cows 69% 0.36 0.25 $19,993 $2,154 $432 21% $28,374 1.20 *Includes discounted lease payments. **Average of farms reporting nonfarm assets and liabilities for 1988. ***Includes FLB/PCA stock and discounted lease payments for cattle and machinery. 32 FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 406 New York Dairy Farms, 1988 Farms with: Item ASSETS Farm cash/chkg./savings Accounts receivable Prepaid expenses Feed & supplies Livestock* Machinery & equipment* FLB & PCA stock Other stock & cert. Land & bui1dings* Total Farm Assets Pers. cash/chkg./savings Cash value of life ins. Nonfarm real estate Auto (personal share) Stocks & bonds Household furnishings All other Total Nonfarm Assets** Total Farm & Nonfarm Assets LIABILITIES Accounts payable Operating debt Short term Advanced gov't. rec. Intermediate*** Long term* Total Farm Liab. Total Nonfarm Liab.** Total Farm & Nonfarm Liabilities Farm Net Worth (Equity Capital) Farm & Nonfarm Net Worth a5 tg 92 Cgws De~. 31 Jan, 1 70 to 84 Cgl!1:S Qec. 31 1 Jm. $ 4,510 14,084 0 34,010 97,948 92,466 3,019 4,751 232,Z51 $483,539 $ 5,046 15,293 4 37,259 104,483 95,936 3,159 5,093 239,661 $505,940 $ 3,641 16,866 0 41,775 115,682 108,882 3,693 2,489 240,295 $533,323 $ $ 7,611 4,076 6,368 3,311 2,287 8,600 2.392 $ 34,644 $ 7,892 6,006 6,368 4,115 3,771 8,776 2.3Z0 $ 39,297 $ 12,975 3,144 30,100 2,716 6,916 6,280 4,590 $ 66,722 $ 11,777 3,960 48,300 2,404 7,214 6,400 Z.585 $ 87,641 $518,183 $545,237 $600,045 $658,560 $ 5,742 1,422 1,712 176 54,621 92.638 $156,310 1.080 $ 4,956 2,410 2,109 0 56,760 82.206 $155,441 1,058 $ 5,422 2,663 3,093 0 75,449 101.029 $187,656 1.128 $ $157,390 $156,499 $188,784 $188,010 $327,229 $360,793 $350,500 $388,738 $345,667 $411,261 $385,993 $470,550 FINANCIAL MEASURES Percent equity Debt/asset ratio-long term Debt/asset ratio-inter. & current Change in net worth with apprec. Total farm debt per cow Debt payments made per cow Debt payments as % of milk sales Amount avail. for debt service Cash flow coverage ratio for 1988 70 to 84 Cgws 69% 0.37 0.25 $23,271 $1,968 $470 22% $32,687 1.15 - -­ 5,940 4,065 981 0 75,857 98,083 $184,926 3,084 85 to 99 Cgws 68% 0.38 0.27 $40,327 $1,926 $579 27% $43,561 1.05 *Includes discounted lease payments. **Average of farms reporting nonfarm assets and liabilities for 1988. ***Inc1udes FLB/PCA stock and discounted lease payments for cattle and machinery. ------­ 6,787 19,378 0 46,435 124,050 112,275 3,717 3,235 255,043 $570,919 -------~ 33 FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 406 New York Dairy Farms, 1988 Farms with: Item ASSETS Farm cash/chkg./savings Accounts receivable Prepaid expenses Feed & supplies Livestock* Machinery & equipment* FLB & PCA stock Other stock & cert. Land & bui1dings* Total Farm Assets Pers. cash/chkg./savings Cash value of life ins. Nonfarm real estate Auto (personal share) Stocks & bonds Household furnishings All other Total Nonfarm Assets** Total Farm & Nonfarm Assets LIABILITIES Accounts payable Operating debt Short term Advanced gov't. rec. Intermediate*** Long term* Total Farm Liab. Total Nonfarm Liab.** Total Farm & Nonfarm Liabilities Farm Net Worth (Equity Capital) Farm & Nonfarm Net Worth 100 to 149 Cows Jan. 1 Dec. 31 150 to 199 Cows Jan. 1 Dec. 31 $ 15,024 25,052 62 60,700 159,687 141,737 5,896 6,261 JJ:2.4QZ $749,826 $ 5,805 5,260 91,000 2,101 2,549 6,500 2.871 $116,086 $ 5,810 5,825 110,969 2,189 3,483 7,138 2,711 $138,124 $ 2,693 10,159 42,571 1,971 836 9,750 $ 69,834 $830,428 $887,950 $1,093,975 $1,176,271 4,179 2,860 3,442 69 99,192 135,158 $244,900 1.14Z $ 4,376 2,775 2,818 0 99,795 131,475 $241,239 94:2 $ $ 137,202 197.395 352,633 1.172 $ 129,905 196.886 353,676 5Z5 $246,047 $242,184 $ 353,810 $ 354,251 $469,442 $584,381 $508,587 $645,766 $ $ $ $ 725,768 822,020 $ $ FINANCIAL MEASURES Percent equity Debt/asset ratio-long term Debt/asset ratio-inter. & current Change in net worth with apprec. Total farm debt per cow Debt payments made per cow Debt payments as % of milk sales Amount avail. for debt service Cash flow coverage ratio for 1988 100 to 149 Cows 68% 0.39 0.26 $39,145 $2,010 $471 22% $55,340 1.09 9,184 34,103 57 79,415 223,016 179,605 13,047 16,900 461L81!:t $1,024,141 15,950 37,876 0 86,404 233,323 182,784 12,959 16,437 49J.Zll $1,079,444 $ 10,907 22,149 0 55,111 149,876 136,228 6,146 5,952 32z.9n $714,342 $ $ 1,~54 9,549 5,399 3,088 $ 671,508 740,165 10,589 9,025 7,270 o o $ 2,738 12,195 51,143 4,979 945 9,964 1!:t,86J 96,827 150 to 199 Cows 67% 0.40 0.27 $54,260 $2,033 $501 24% $70,113 1.06 *Includes discounted lease payments. **Average of farms reporting nonfarm assets and liabilities for 1988. ***Includes FLB/PCA stock and discounted lease payments for cattle and machinery. 34 FARM FAMILY FINANCIAL SITUATION BY HERD SIZE 406 New York Dairy Farms, 1988 Farms with: More than 300 Cows Dec, 31 Jan, 1 2QQ tg 292 COliS I}ec, 31 J!l!.n. 1 Item AS~ETS 6,852 42,654 0 110,563 294,678 196,810 13,911 22,919 Farm cash/chkg./savings Accounts receivable Prepaid expenses Feed & supplies Livestock* Machinery & equipment* FLB & PCA stock Other stock & cert. Land & bui1dings* Total Farm Assets $ Pers. cash/chkg./savings Cash value of life ins. Nonfarm real estate Auto (personal share) Stocks & bonds Household furnishings All other Total Nonfarm Assets** Total Farm & Nonfarm Assets $ 10,227 7,164 25,273 3,773 25,527 10,000 $ 98,552 LIABILITIES Accounts payable Operating debt Short term Advanced gov't. rec. Intermediate*** Long term* Total Farm Liab. Total Nonfarm Liab.** Total Farm & Nonfarm Liabilities Farm Net Worth (Equity Capital) Farm & Nonfarm Net Worth 60tl,656 $1,295,043 6,,047 46,641 381 120,265 310,431 218,866 15,602 22,927 616,43Z $1,357,597 $ $ 1~,58§ $1,393,595 $ 11,091 7,318 24,818 4,159 28,617 10,455 1§,481 104,939 $1,462,536 $ 1,616 1,451 25,600 2,935 16,473 8,600 13.919 70,595 $ 8,145 1,505 34,000 3,900 17,730 9,200 $ 80,411 $ $ ~.930 $2,353,441 $2,619,146 9,653 57,635 15,232 0 392,319 469,520 944,359 0 11,539 89,818 24,590 0 463,532 461,38Z $1,050,866 0 9,504 10,964 12,095 0 210,412 209,592 452,568 12.223 $ $ 465,291 $ 473,000 $ 944,359 $1,050,866 $ $ 842,475 928,304 $ $ 894,843 989,536 $1,338,487 $1,409,082 $1,487,869 $1,568,280 $ $ FINANCIAL MEASURES Percent equity Debt/asset ratio-long term Debt/asset ratio-inter. & current Change in net worth with apprec. Total farm debt per cow Debt payments made per cow Debt payments as % of milk sales Amount avail. for debt service Cash flow coverage ratio for 1988 $ 13,705 10,809 19,329 0 211,558 2QZ,354 462,755 10,245 17 ,077 102,600 5,032 288,123 564,900 338,523 21,595 68,053 1,132,831 $2,538,735 11,551 80,033 3,601 261,579 496,895 314,866 15,888 66,023 1,032,410 $2,282,846 $ 200 tg 299 Cows 66% 0.34 0.34 $52,367 $1,851 $537 23% $120,532 1.22 $ $ $ More than 300 Cows 59% 0.41 0.42 $149,382 $2,198 $496 20% $303,053 1.56 *Inc1udes discounted lease payments. **Average of farms reporting nonfarm assets and liabilities for 1988. ***Inc1udes FLB/PCA stock and discounted lease payments for cattle and machinery, 35 SELECTED BUSINESS FACTORS BY HERD SIZE 406 New York Dairy Farms, 1988 Farms with: Item Number of farms Croppini Proiram Analysis Total Tillable acres Tillable acres rented* Hay crop acres* Corn silage acres* Hay crop, tons OM/acre Corn silage, tons/acre Oats, bushels/acre Forage OM per cow, tons Tillable acres/cow Fert. & lime exp./ti1. acre Total machinery costs Machinery cost/tillable acre 40 to 54 Cows 55 to 69 Cows 70 to 84 Cows 85 to 99 Cows 29 67 81 53 36 107 31 78 15 2.0 12.6 3.0 6.7 3.2 $15.84 $13,368 $125 156 49 98 28 2.2 13.4 33.4 7.4 3.3 $22.18 $18,263 $117 219 67 131 37 2.4 12.7 58.1 7.7 3.6 $23.56 $26,363 $120 252 76 139 48 2.5 13.9 42.8 7.5 3.3 $27.58 $31,093 $123 296 108 168 63 2.6 13.8 41.5 7.9 3.2 $27.97 $41,459 $140 47 36 742,474 15,833 $9.60 $15.30 $12.98 $613 $3.87 61 77 93 51 66 77 979,950 1,252,616 1,608,344 16,006 16,165 17,356 $9.36 $9.13 $9.08 $15.16 $14.17 $13.31 $12.96 $12.83 $12.87 $575 $584 $620 $3.59 $3.61 $3.57 Less than 40 Cows Dairy Analysis 33 Number of cows Number of heifers 22 Milk sold, 1bs. 544,550 Milk sold/cow, 1bs. 16,264 Operating cost of prod. mi1k/cwt. $8.97 Total cost of prod. mi1k/cwt. $15.57 Price/cwt. milk sold $12.68 Purchased dairy feed/cow $626 Purchased dairy feed/cwt. milk $3.85 Purchased grain & cone. as % of milk receipts 27% Purchased feed & crop expense/cwt. milk $4.43 28% 27% 27% 28% $4.66 $4.50 $4.57 $4.51 Capital Efficiency Farm capital/worker Farm capital/cow Farm capital/til. acre owned Real estate/cow Machinery investment/cow Capital turnover, years $150,202 7,451 3,240 4,082 1,340 2.83 $167,498 6,677 2,926 3,546 1,195 2.53 $176,466 6,975 2,809 3,567 1,281 2.66 $181,148 6,385 2,811 3,048 1,216 2.39 $189,902 5,958 2,937 2,673 1,193 2.11 Labor Efficiency Yorker equivalent Operator/manager equivalent Milk sold/worker, 1bs. Cows/worker York units/worker Labor cost/cow Labor cost/tillable acre 1.66 1.10 327,861 20 205 $532 $166 1.87 1.16 397,172 25 263 $444 $133 2.42 1.36 404,979 25 285 $449 $126 2.73 1.41 458,644 28 303 $425 $131 1.31 553,188 32 352 $406 $127 *Average of all farms, not only those reporting data. 2.91 36 SELECTED BUSINESS FACTORS BY HERD SIZE 406 New York Dairy Farms, 1988 Farms with: Item Number of farms Cropping Program Analysis Total tillable acres Tillable acres rented* Hay crop acres* Corn silage acres* Hay crop, tons DM/acre Corn silage, tons/acre Oats, bushels/acre Forage DM per cow, tons Tillable acres/cow Fert. & lime exp./til. acre Total machinery costs Machinery cost/tillable acre Dairy Analysis Number of cows Number of heifers Milk sold, lbs. Milk sold/cow, 1bs. Operating cost of prod. mi1k/cwt. Total cost of prod. milk/cwt. Price/cwt. milk sold Purchased dairy feed/cow Purchased dairy feed/cwt. milk Purchased grain & conc. as % of milk receipts Purchased feed & crop expense/cwt. milk Capital Efficiency Farm capital/worker Farm capital/cow Farm capital/til. acre owned Real estate/cow Machinery investment/cow Capital turnover, years Labor Efficiency Worker equivalent Operator/manager equivalent Milk sold/worker, lbs. Cows/worker Work units/worker Labor cost/cow Labor cost/tillable acre 100 to 149 Cows 150 to 199 Cows 200 to 299 Cows 300 or More Cows 81 25 21 13 367 134 190 84 2.6 14.7 44.7 7.7 3.1 $29.56 $49,168 $134 500 216 241 140 2.8 13.6 58.3 7.6 2.9 $30.94 $70,776 $142 618 214 243 226 2.8 14.2 35.3 7.2 2.6 $38.94 $95,583 $155 919 295 309 382 3.4 15.1 54.6 6.5 2.0 $33.63 $141,975 $155 453 241 119 172 343 179 148 96 1,959,901 2,864,891 4,099,894 8,665,733 16,656 17,036 19,113 16,531 $9.41 $9.37 $10.02 $9.93 $13.65 $13.73 $13.17 $11.87 $13.13 $13 .09 $12.94 $13 .25 $737 $593 $635 $652 $3.59 $3.81 $3.83 $3.86 27% 29% $4.58 $4.77 $206,856 6,175 3,142 2,798 1,172 2.27 $214,798 6,115 3,703 2,798 1,053 2.14 3.54 1.48 553,786 33 351 $383 $124 4.90 1.56 585,070 35 371 $425 $146 *Average of all farms, not only those reporting data. 29% $4.88 28% $4.55 $220,180 5,511 3,283 2,541 864 2.01 $236,828 5,317 3,870 2,388 721 1. 72 6.02 1.42 680,615 40 405 $405 $158 10.18 1.47 851,294 45 438 $482 $238 37 IDENTIFY AND SET GOALS If businesses are to be successful, they must have direction. Written goals help provide businesses with an identifiable direction over both the long and the short term. Goal setting is as important on a dairy farm as it is in other businesses. Written goals are a tool which farm operators can use to ensure that the business continues to move in the proper direction. 1. 4. Goals should h~ ~nQ~;~;~ You shoula designate a time when each goal will be achieved. Goal setting on a dairy farm does not have to be a complex process. In many cases it provides a process for writing down and agreeing on goals that you have already given some thought to. It is also important to remember that once you write out your goals they are not cast in concrete. If a change takes place which has a major impact on the farm business, the goals should be reworked to accommodate that change. Refer to your goals as often as necessary to keep the farm business progressing. It is important to identify both long and short range goals when looking at the future of your farm business. A suggested format for writing out your goals is as follows: a. Begin with a general philosophy statement which incorporates both business and family goals. b. Identify 4-6 long range goals. c. Identify specific short range goals for a given time period (i.e., one year). Worksheet for Setting Goals I. General Philosophy and Objectives -- - -- ------ ------------- 38 Worksheet for Setting Goals (continued) II. Long Range Goals (require two or more years to achieve) III. What Short Range Goals (possible to achieve in one or two years). I How IWben NOTE: Once long and short range goals have been identified, it is helpful to rank them in order of priority. Prepared by T.R. Maloney, Extension Associate, Cornell University Other Agricultural Economics Extension Publications No. 90-3 The Economics of Concord and Niagara Grape Production in the Great Lakes Region of New York, 1989 G. B. White J. S. Kamas No. 90-4 Agricultural District Legislation in New York as Amended Through 1989 K. V. Gardner No. 90-5 Agricultural Lending Policy of New York Commercial Banks J. M. Thurgood E. L.· laDue No. 90-6 Proceedings of Managing Farm Personnel in the 90's Bernie Erven Guy Hutt Tom Maloney Bob Milligan No. 90-7 The U.S. Dairy Situation and Outlook for 1990 Andrew M. Novakovic No. 90-8 Dairy Farm Business Summary, Northern New York, 1989 Stuart F. Smith Linda D. Putnam No. 90-9 Dairy Farm Business Summary, Western Plain Region, 1989 Stuart F. Smith Linda D. Putnam No. 90-10 Dairy Farm Business Summary, Central New York and Central Plain Regions, 1989 Wayne A. Knoblauch Linda D. Putnam No. 90-11 Dairy Farm Business Summary, Eastern Plateau Region, 1989 Robert A. Milligan Linda D. Putnam Carl A. Crispell William H. Gengenbach Gerald A. LeClar No. 90-12 National and State Trends in Milk Production Andrew Novakovic Kevin Jack Maura Keniston No. 90-13 Dairy Farm Business Summary, Oneida-Mohawk Region, 1989 Eddy L. LaDue Mark E. Anibal Jacqueline M. Mierek No. 90-14 Dairy Farm Business Summary, Western Plateau Region, 1989 George L. Casler